What is a freehold charge over Jersey property?
Freehold Charge
If the property is a freehold property, then the Bank will secure its loan by means of either:
- a simple conventional hypothec (‘HCS’)
- a bond or acknowledgement of indebtedness registered in the Royal Court (hypothec judicaire or ‘HJ’). The HCS and HJ are both versions of Jersey freehold charges.
Freehold Charge Procedure
Once you sign your offer letter from the Bank (sometimes called the facility letter) the Bank will instruct its lawyer to draft the legal documentation. To avoid any hold ups with the purchase completion date, it is important to ensure that you return your signed offer letter to the Bank as soon as possible.
As soon as we receive the Bank’s security documents, we will endeavour to send the freehold charge documents to you as soon as possible, to give you time to read over them prior to our meeting. We will of course answer any questions you may have when we meet.
You should bear in mind the requirements of the Bank in relation to an HJ (freehold). The Bank will require that the HJ is renewed within 10 years of the initial registration. You will be required to sign an irrevocable authorisation permitting the Bank to do this on your behalf. You will incur additional costs if and when a re-registration is required.
It should also be noted that, in addition to the freehold charge documentation that you will be required to sign, Parslows Jersey will also be required to provide a certificate of title to the Bank.
In essence, this document will declare to the Bank that the property you are buying is suitable for a charge to be registered against it.
This certificate will require us to confirm that the title to the property is satisfactory; that the relevant consents from the various States departments are in force (e.g. Housing consents); and that the various search letter replies are satisfactory.
We are obligated to disclose any material adverse factors affecting the property, and the company and the shares, in the case of a security interest.
Payment of Stamp Duty
Please note that a loan secured against freehold property will attract stamp duty. This is in addition to the duty or tax that you will pay to purchase your property. You may qualify for reduced stamp duty if you are a first time buyer.
You will need to provide us with cleared funds for stamp duty prior to completion.
Payment of proceeds of loan
HCS or HJ – your loan is usually paid by the Bank on the Tuesday following registration.
Please remember that your loan will not be provided gross. The bank and its lawyer will in most circumstances deduct their fees and charges prior to transfer (unless you have arranged otherwise).
Funds which arrive in our account too late on the day in question to forward them on will be dealt with the next day. We cannot influence the speed of the banking system. In some circumstances this may involve you in having to account for a day’s interest.
Re-registration
Jersey HJs require re-registration after 30 years. As such, when you sign the relevant banking documentation you will be required to enter into a document giving the bank permission to re-register the charge over your property at that point in time.